Cambodian workers lose jobs as garment industry collapses

Reporter: Peter Lloyd

TONY JONES: It is one of the world's poorest countries, and now Cambodia is counting the cost of new rules that govern world trade. The garment industry, the country's biggest export earner, is collapsing, and a staggering 40,000 workers have already lost their jobs. In a country where work is scarce at the best of times, some unemployed women are considering desperate ways to raise cash. South East Asia correspondent Peter Lloyd reports from Phnom Penh.

PETER LLOYD: It was never very much, but until a few months ago Lap Sopheap had a job making clothes in a garment factory that paid her $65 a month. Now she's out of work and wondering whether she can still afford the rent for this squalored room in one of Phnom Penh's poorest neighbourhoods.

LAP SOPHEAP, SACKED WORKER: (translated) I'm an orphan. I have no parents. I have nowhere to go. I am by myself.

PETER LLOYD: Until last year, 80 cents in every dollar Cambodia earned came from making and selling clothes, mostly to the US and Europe.

ROSANA BARBERA, RIGHTS CAMPAIGNER: GAP, Nike, Adidas, Levis.

PETER LLOYD: Garment factories employed more than a 250,000 people, mostly women. But in January, all of that changed. Cambodia's garment industry was built on the back of strict World Trade Organisation quotas, designed to prevent any single third-world country from dominating the rag trade. But since January, that quota system has come to an end, and that means Cambodia must now compete in an open market against far larger rivals like China and India, which pay even lower wages than they do here.

ROSANA BARBERA: So with this free trade, what it actually means is free for corporations to be able to set up operations anywhere in the world where they think would be most benefit to them and what is most benefit to them is where they're able to make most profit.

PETER LLOYD: As they stream home at the end of another working day, these women wonder how long their jobs will last. Already 26 other factories have closed.

WOMAN 1: (translated) I am worried about it. If the factory closes, I will have no job.

WOMAN 2: (translated) I will have to work as a rice farmer again.

CHEA MONY, UNION LEADER: (translated) Now especially Cambodia has become a WTO member, so we have to work competitively with China and it is difficult because China looks after their industry better than us in Cambodia.

PETER LLOYD: Speaking up for workers' rights is a dangerous business. Last year, it was Chea Mony's brother who led the union movement until he was gunned down for campaigning for better pay and conditions in industries like the rag trade.

CHEA MONY: In general, I blame the Cambodian Government for not looking after this industry like other countries. They don't care about this industry, but it is the leading industry in Cambodia.

PETER LLOYD: In desperation, some sacked workers are considering selling their virginity.

ROSANA BARBERA: People have approached them and said you can get $250-350, depending on how beautiful you are and how light your skin colour is.

LAP SOPHEAP: I don't know how much longer I can stay here, but eventually I will have to move, because I can't afford to pay for the rent.

PETER LLOYD: In a country where women are so easily exploited, Lap Sopheap knows she faces an uncertain future. In Phnom Penh, Peter Lloyd for Lateline.